Bitcoin’s price fell more than $800 in under five minutes on Tuesday, pushing the broader cryptocurrency market into the red.
The sell-off began at 14:45 UTC (10:45 a.m. ET) when the cryptocurrency was trading at highs above $10,137 and by 14:49 UTC, the price fell to $9,298. At press time, bitcoin is changing hands near $9,500, representing a 6.5% drop on the day, according to CoinDesk’s Bitcoin Price Index. On BitMEX, prices were as low as $8,600.
The sudden price drop may have trapped many traders on the wrong side of the market. Moreover, the market was looking strong following Monday’s convincing move above $10,000, and a few analysts were expecting bitcoin to continue rising toward $11,000.
However, buyers once again failed to keep prices above the $10,000 mark. The cryptocurrency has struggled multiple times over the past 12 months or so to establish a strong base above $10,000. The retreat, however, is unlikely to deter investors, who believe in bitcoin’s long-term value as a safe haven asset and a hedge against inflation.
Moreover, “HODLing” sentiment has remained strong despite the unprecedented price volatility seen in the past five months. Nearly 60% of bitcoin’s supply hasn’t changed hands in over a year, a likely sign investors are holding in expectation of gains, according to Glassnode.
The latest sell-off, however, is weighing on alternative cryptocurrencies. At press time, litecoin is down 5%, while Ethereum’s ether token is reporting a 6% daily loss. Other major cryptocurrencies like bitcoin cash, bitcoin SV, and XRP are also flashing red.
Meanwhile, traditional markets are seeing mixed action. While the Dow Jones Industrial Average is up 0.4%, the tech-heavy Nasdaq index is losing 0.5% of its value. Major European equity indices like Germany’s DAX and U.K. FTSE are up 3% and 1%, respectively.
European shares seem to have picked up a strong bid in response to reports that Germany could launch a fresh stimulus package worth 100 billion euros ($112 billion) to defend against the coronavirus. The European Union has already proposed a plan-European stimulus plan of 750 billion euros.